Category Archives: Workers’ Compensation

Three new policy briefs from NELP take a closer look at “gig economy” workers’ rights.

On-Demand Workers Should Be Covered by Workers’ Compensation
Many on-demand companies operate in dangerous industries with high workplace injury and fatality rates. Yet they classify their workers as “independent contractors” and thereby avoid the responsibility of providing workers’ compensation and other employee protections. This practice presents real costs to the workers hired by these companies and shifts the cost of work-related injuries onto the backs of workers and the general public. The job-related dangers to which these workers are exposed makes it critical that they be covered by workers’ comp.

Flexibility and the On-Demand Economy
On-demand companies often tout flexibility as one of the main reasons why people choose to work for them. This brief challenges that premise, however, showing that monetary pressures, peak demand periods, and company-imposed rules and incentives mean workers have much less flexibility than the companies claim. The brief also debunks the assertion that flexibility is incompatible with employee status.

Ensuring Fairness in Background Checks for On-Demand Work
On-demand companies promote the idea that they provide work opportunities for people in communities with high unemployment. But many of these companies fall short when it comes to complying with the civil rights and consumer laws regulating the use of background checks for employment. Strong protections are needed to ensure that companies use non-discriminatory hiring practices.

For nearly a century, millions of workers have endured punishing jobs in construction, mining and factory work—jobs with high levels of work-related disability and injury. As a tradeoff for the dangers, they’ve had the assurance of workers’ compensation if injured permanently on the job. Employers accepted this deal, albeit sometimes grudgingly, because it removed the possibility of being sued over work-related injuries.

But as labor has weakened and Republicans have won control of more and more statehouses, states have slowly chipped away at workers’ compensation benefits.

Since just 2003, more than 30 states have passed laws that have “reduced benefits for injured workers, created hurdles for medical care or made it more difficult for workers to qualify,” according to a recent investigative series by ProPublica and NPR. Some of the harshest cuts came in California, Arizona, Florida, Oklahoma, North Dakota, Kansas, Indiana and Tennessee. Today, according to the federal Occupational Safety and Health Administration (OSHA), many injured and disabled workers “never enter the workers’ compensation system.” OSHA also estimates that workers’ compensation covers only about 21 percent of the lost wages and medical bills encountered by injured workers and their families…..

On March 6, 2015, the Stetson Law Review hosted a symposium titled “Inequality, Opportunity, and the Law of the Workplace.” The symposium brought together legal academics, economists, attorneys, journalists, and students to explore the relationship between rising economic inequality in the United States and the complex web of federal, state, and local laws that constitute the field of labor and employment law. Following the live symposium, works by many of the panelists and speakers were published in the Stetson Law Review, Volume 45, Issue 1.

….This year, as we celebrate the eightieth anniversary of the passage of the Wagner Act—our nation’s basic law that guarantees workers the right to organize and bargain collectively with their employers-organized labor is, as a percentage of the private sector workforce, at a historic low, steady decline since the 1950s. Workers’ bargaining power is, as a consequence, sharply reduced, and income inequality is at levels not seen since the Gilded Age. I leave it to other speakers on this program to document the nature and extent of present-day wealth and income disparity. I will confine my remarks to outlining the relevance of labor law to this serious challenge, the limits of existing law, and what the future might hold for restoring the promise of labor law……

….So what can be done to turn back the long-term trend of ever increasing economic inequality? First, it is necessary to realize that “[t]he evolution of inequality is not a natural process.” That the level of economic inequality is a question of politics becomes clear by looking at the United States experience in the period starting with World War II and ending in the early 1980s. While economic inequality was being reduced until the late 1970s, the Reagan Revolution that radically reduced taxes at the high end of the income pyramid also resulted in the reversal of the trend toward less inequality and replaced it with the ever increasing inequality seen since then. No matter how impossible it seems at the moment, new politics could reverse the present trends. That the problem is political does not, of course, make it simple to solve.

Added to the political challenges within any particular country that is active in the globalized economy is the fact that the problem of economic inequality is essentially a worldwide problem, requiring at least a coordinated, if not uniform, response by the major countries….. Finally and perhaps most significantly, the best way to turn around the ever increasing economic inequality would be to turn around the virtually worldwide decline in the union movement or to create a new transnational social movement aimed at using the collective strength of workers to protect and enhance their employment opportunities…..

In 1935, Florida passed workers’ compensation legislation that made the quid pro quo justification its central theme. At first, the scheme worked efficiently and furnished injured workers with the benefits it had been designed to deliver. As time passed, however, the workers’ compensation legislation failed to keep up with legal developments and eventually lost its backbone. This Article is designed to expose deficiencies in the Florida workers’ compensation scheme—as they relate to the Florida Workers’ Compensation Act’s “Exclusiveness of Liability” provision—and propose solutions to address them.

Part I of this Article will describe workers’ compensation’s path to recognition in the United States, while Part II will review its adoption in Florida. Part III will overview the 1970 legislative changes that permanently altered the character of the Florida Workers’ Compensation Act (FWCA or the Act) by barring injured workers from recovery in tort and making the Act an exclusive remedy. Part IV will explain how these legislative amendments fail to support the archaic rationale behind the workers’ compensation scheme in light of the recent Florida tort law developments. Part V will review the constitutionality of the FWCA—with a concentration on the right of court access—under the Kluger paradigm. And finally, Part VI of this Article will propose solutions to mend the exposed statutory deficiencies….

…As this Article explains, wage stagnation is not inevitable. It is the direct result of public policy choices on behalf of those with the most power and wealth that have suppressed wage growth for the vast majority in recent decades. Thus, because wage stagnation was caused by policy, it can be alleviated by policy. In particular, policymakers must address two distinct sets of policies….. One set of policies that has stifled wage growth includes aggregate factors, which have led to excessive unemployment over uch of the last mfour decades, as well as others that have driven the financialization of the economy and excessive executive pay growth. …. Another set of policies concerns the business practices, eroded labor standards, and weakened labor market institutions that have reduced workers’ individual and collective power to bargain for higher wages. ….

……First, let me set the framework. When one talks about “inequality,” one can focus on some workers being paid too little, or others being paid too much. Working on either dimension could reduce inequality. I will focus on the workers-being-paid-too-little side of that equation. When we think of workers being paid “too little,” the discussion normally begins, and sometimes ends, with discussions of how to increase the income that low-income workers earn from their employers. Increases in the minimum wage would be the prime example: if we increase it, low-income workers might receive more income from their employers. When discussing topics such as garnishment and payday loans, the narrative becomes complicated in two main ways. First, we are not talking about the total amount those workers are owed—for example, the number of hours they work times the minimum wage. Rather, we are talking about the amount they actually receive at the end of the day. We are talking about a different kind of threat to the earnings of low-wage workers—not only the direct threat of simply being paid too little, but also the indirect threat of not getting all of those meager wages. To state it somewhat differently, if a worker needs $X/month to survive, she might fail to get there because the minimum wage is too low, or she might fail to get there because—even though the minimum wage is sufficient—the amounts taken out of her check through garnishment will cause her to fall below that amount. The two scenarios are equally problematic for the worker, but the second tends to be less on the radar screen than the first……

Despite the pervasiveness of discrimination based on sexual orientation and gender identity, federal legislation that explicitly prohibits it does not exist. To combat sexual orientation and gender identity discrimination, the Employment Non-Discrimination Act (ENDA) has been proposed. ENDA, if enacted, would explicitly prohibit discrimination based on “actual or perceived sexual orientation or gender identity.” ….. Some legal scholars assert that ENDA, as it is currently written, includes concerning language that may have the effect of decreasing protection rather than increasing it. One of the more concerning provisions is the religious exemption section, especially in the wake of the Supreme Court’s Hobby Lobby decision in June 2014. ….. As a consequence, many major gay activist groups pulled their support for ENDA because of the religious exemption that is included, asserting that the decision in Hobby Lobby is just “a hop, skip and jump” from allowing employers to discriminate against LGBT individuals because of religious beliefs. …..

Efforts to address income inequality generally focus on wealth redistribution through taxation and government benefits. But these efforts do not attack the core problem — the unfair distribution of wealth at the firm level. This essay, a contribution to the “Inequality, Opportunity, and the Law of the Workplace” symposium, argues that workers need power within their firms to stake their claims to larger slices of the corporate pie. Even though the current law of the workplace does provide regulatory support for workers, it fails to change internal firm governance. Policymakers who want to take on income inequality as a structural matter should turn to corporate law and provide workers with a way of playing a role in the ongoing governance of the business.

From the abstract:
The “grand bargain” of workers’ compensation, whereby workers relinquished the right to sue their employers in exchange for no-fault occupational injury insurance, was one of the great tort reforms of the Twentieth Century. However, there is one U.S. state that has always permitted employers to decline workers’ compensation coverage, and in which many firms (“nonsubscribers”) have chosen to do so: Texas. This study examines the impact of Texas nonsubscription on fifteen large, multistate nonsubscribers that provided their Texas employees with customized occupational injury insurance benefits (“private plans”) in lieu of workers’ compensation coverage between 1998 and 2010. As economic theory would lead one to expect, nonsubscription generated considerable cost savings. My preferred estimates suggest that costs per worker hour fell by about 44 percent. These savings were driven by a drop in the frequency of more serious claims involving replacement of lost wages, and by a decline in costs per claim. Both medical and wage-replacement costs fell substantially. Although the decline in wage-replacement costs was larger in percentage terms than the drop in medical costs, the latter was equally financially consequential since medical costs comprise a larger share of total costs. The second stage, which compares the effect of nonsubscription across different types of injuries, finds that non-traumatic injury claims were more responsive to nonsubscription than traumatic ones. In part, this disparity reflects the fact that private plans categorically exclude some non-traumatic injuries from the scope of coverage. Yet even those non-traumatic injuries that were not excluded from coverage declined more than traumatic injuries, consistent with aggressive claim screening by employers and/or a decline in over-claiming and over-utilization by employees in the nonsubscription environment. The third stage examines the effect of nonsubscription on severe, traumatic injuries, which are generally the least susceptible to reporting bias and moral hazard. The sizable and significant decline in such injuries is consistent with an improvement in real safety, although it could also be explained by aggressive claim screening. The final stage of the study probes whether four ubiquitous features of private plans – non-coverage of permanent partial disabilities, categorical exclusion of many diseases and some non-traumatic injuries, capped benefits, and lack of chiropractic care – explain the observed trends. Surprisingly, these features account for little of the estimated cost savings. Although many study participants describe limited provider choice and 24-hour reporting windows as major cost drivers, data limitations preclude me from identifying their respective impacts. Overall, my findings suggest an urgent need for policymakers to examine the economic and distributional effects of converting workers’ compensation from a cornerstone of the social welfare state into an optional program that exists alongside privately-provided forms of occupational injury insurance.

The debate surrounding the gig economy has cast light on workers who depend for their livelihood on multiple sources of income. For example, an Uber driver may also be working for Lyft, and a freelance website designer may have five clients at the same time. But when classified as contractors, these workers may miss out on employer-provided health benefits, unemployment, worker’s compensation, paid sick days, and more. In a letter titled “Common ground for independent workers,” a group of tech gurus, union leaders, and startup CEOs recently called for a change in how benefits work. As they argued in the letter: “Everyone, regardless of employment classification, should have access to the option of an affordable safety net that supports them when they’re injured, sick, in need of professional growth, or when it’s time to retire.” Their call to action pushes for “flexibility and stability”: the flexibility to work multiple jobs, temporarily or long term, with varying schedules—all while experiencing the stability of a safety net. Workers’ benefits, they say, shouldn’t be tied to an employer. They should be portable.

From the abstract:
Background: Little research has been done to identify reasons employers fail to report some injuries and illnesses in the Bureau of Labor Statistics Survey of Occupational Injuries and Illnesses (SOII).

Methods: We interviewed the 2012 Washington SOII respondents from establishments that had failed to report one or more eligible workers’ compensation claims in the SOII about their reasons for not reporting specific claims. Qualitative content analysis methods were used to identify themes and patterns in the responses.

Results: Non-compliance with OSHA recordkeeping or SOII reporting instructions and data entry errors led to unreported claims. Some employers refused to include claims because they did not consider the injury to be work-related, despite workers’ compensation eligibility. Participant responses brought the SOII eligibility of some claims into question.

From the abstract:
Background: Studies suggest employers underreport injuries to the Bureau of Labor Statistics Survey of Occupational Injuries and Illnesses (SOII); less is known about reporting differences by establishment characteristics.

Results: An estimated 70% of workers’ compensation claims were reported in SOII. Claims among state and local government establishments were most likely to be reported. Compared to large manufacturing establishments, unreported claims were most common among small educational services establishments and large construction establishments.

Conclusions: Underreporting of workers’ compensation claims to SOII varies by establishment characteristics, obscuring true differences in work injury incidence. Findings may differ from previous research due to differences in study methods.

Legal barriers for sick workers can be insurmountable; costs are shifted to families and federal programs such as Medicare…. Americans hurt at work have a difficult enough time with the state-by-state system when their injury is so obvious and immediate — such as an amputation — that it can’t be blamed on anything but the job. When it comes to chemically induced illnesses and other job-triggered diseases that creep up over time, according to researchers and the federal agency overseeing occupational safety, workers’ comp rarely works at all….

The Demolition of Workers’ Comp
Over the past decade, states have slashed workers’ compensation benefits, denying injured workers help when they need it most and shifting the costs of workplace accidents to taxpayers.

From the press release:
Workers’ compensation benefits as a share of payroll for injured workers continue to decline even as employment grows and overall employer costs increase, according to a new report from the National Academy of Social Insurance (the Academy). … Despite the growth in employment following the Great Recession – and the significant uptick in employees eligible to receive workers’ compensation – benefits per $100 of covered payroll dropped to $0.98 in 2013, a 5 percent decrease from 2009. At the same time, the growing workforce has translated into rising workers’ compensation costs for employers – now $1.37 per $100 of covered payroll, a 5 percent increase from 2009. Workers’ compensation benefits as a share of payroll were lower in 2013 than during almost any period in the last three decades, according to the report, Workers’ Compensation: Benefits, Coverage, and Costs, 2013. Total workers’ compensation benefits in 2013 were $63.6 billion, while employer costs were $88.5 billion. Benefits as a percent of payroll declined in 39 states between 2009 and 2013, continuing a national trend in lower benefits relative to payroll that began in the 1990s. ….

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